back to article Oh, those crazy Frenchies: Facebook faces family photo tax in France

Facebook should pay the French government for hosting the holiday photos and status updates of the French people, a new report commissioned by the French government has suggested. The new 200-page report* on taxing the digital economy - commissioned by four French Cabinet Ministers - proposes that France should tax data …

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      1. Tom 35

        Why would companies leave France

        To set an example?

        They don't want every other country to copy the tax. What they lost in France would be less then what it would cost if other countries copy the tax.

        1. Anonymous Coward
          Anonymous Coward

          @ Tom 35

          They don't want every other country to copy the tax. What they lost in France would be less then what it would cost if other countries copy the tax.

          Not necessarily.

          If they are still profitable in each country, then it doesnt matter.

          If other countries copy the tax, they can treat each country on a case by case basis and decide if it worth staying. If it isn't they leave and local businesses try to fill the gap.

          There is no automatic right to succeed or trade just because the company is an internet giant.

          1. Anonymous Coward
            Anonymous Coward

            Re: @ Tom 35

            > There is no automatic right to succeed or trade just because the company is an internet giant.

            I was with you right until that point.

            In this case, they are talking about increasing the tax burden of one particular type of company because the government has decided that they don't pay enough tax. I know if I was a wine maker and the government decided to increase the tax they take from wine makers specifically by a factor of 10, I would be pretty miffed. It smacks of victimisation which is really outside the remit of any government, although they do do it from time to time.

            1. Anonymous Coward
              Anonymous Coward

              Re: @ Tom 35

              I know if I was a wine maker and the government decided to increase the tax they take from wine makers specifically by a factor of 10, I would be pretty miffed.

              I cant argue with that and nothing I was saying was there to imply that what the French government were doing was "morally" justified (although moral taxes is a totally different argument).

              The reality is any business has to trade in an environment set by the country in which they operate. Frequently laws are changed which make one business model no longer acceptable and businesses have a choice of either changing, moving or closing.

              If you ran a company which sold wine internationally, you might be pretty miffed that it is really hard advertising your products in Saudi, and in the UK we might all agree that it is a barking mad approach, but in reality it is just the business operating environment.

              In this example, yes, Farcebook et al, might be pretty miffed at the increase in tax, and they might (rightly) feel it is unjust and a way of taxing a particular type of company (but this happens in lots of other ways anyway) but if the French government changes it tax in this manner, they have a simple choice - sacrifice their profits in a sulky protest, or accept the increased cost of doing business.

              Obviously when the increased cost outweighs the profit, then the choice becomes clear, but until then, profit is profit.

          2. roselan
            FAIL

            Re: @ Tom 35

            so, at the end, the tax is paid by the customer.

            It means that this tax subsidize other sectors. By example, traditional media, up 1-2b, very close to the government.

            More than distorting fair competition or at best helping local industries, this shows off, once more, the deep and weaved level of corruption in the french government.

      2. Freimer

        Re: I'm sorry...

        They would leave because even if they still made a profit, they could likely make more of a profit elsewhere, for the same effort. There comes a time where taxes are high enough that it is just not worth the effort to continue to work.

        1. Anonymous Coward
          Anonymous Coward

          Re: I'm sorry...

          They would leave because even if they still made a profit, they could likely make more of a profit elsewhere, for the same effort. There comes a time where taxes are high enough that it is just not worth the effort to continue to work.

          Not sure that makes sense.

          Try it with the numbers.

          If they can make 2bn euros in France while paying 50m tax, they are making 1.95bn profit. If the tax rises to 500m they would be making 1.5bn profit.

          If they can make 1.5001bn profit elsewhere, then why not do that as well as get the 1.5bn profit in France. This isnt an argument for shutting down a massively profitable service.

          The whole point of these webservice companies is that they can deliver services for the same costs anywhere so the effort of working in France is effectively transparent when it is related to working in (say) Portugal, Spain, Holland, Thailand etc.

          Profit is profit. Less profit is still more than no profit.

          Now if the tax was 2.000001bn euros then, of course, they would cease operating in France. But I havent seen that suggested.

    1. Barrie Shepherd
      Happy

      Re: I'm sorry...

      czsaloco writes; "If France keeps this up they'll find themselves shut off to the modern world as companies refuse to talk to them anymore"

      That is probably what the french government raelly want - it would halt the dilution of the french language/culture/way of life/values etc.

    2. sabroni Silver badge

      Re: FaceBook has chosen to not be unavailable in your country

      so what's the problem?

      1. Matt Bryant Silver badge
        Happy

        Re: sabroni Re: FaceBook has chosen to not be unavailable in your country

        Seeing as Facesbook is about the same as digital pollution I'd be quite happy if it got killed off in the UK.

    3. Nuno
      Childcatcher

      Re: I'm sorry...

      they can always switch back to Minitel...

  1. Chris Miller

    "Google, Apple and Amazon make between €2.5bn and €3bn apiece in revenue from France. However the average tax paid by each company is €4m a year, instead of the €500m in corporation tax they'd pay if they were French companies."

    I'd love to know how these figures were calculated. If I view a Google ad for a Korean company placed on my UK screen by a server in Ireland (or Poland or Kazakhstan), where should the revenue be allocated? And do French companies really pay 20% of their revenues in tax (or is that actually VAT)?

    1. JetSetJim
      Happy

      you forgot to hop through a French proxy in that chain to land "in France".

    2. Bod

      I'd assume the €4m tax reference is the tax they pay in France. What all these "look, they're avoiding taxes!" rants often fail to point out is they're only (and legally) avoiding or rather minimising taxes in a particular country but still pay taxes elsewhere. Google, Facebook etc of course are paying plenty of taxes in the US and their European based counterparts pay taxes in the most tax efficient part of Europe, which they are entitled to do under our ideal of a free market in Europe and are required to do so for their shareholders.

      And besides anyone at all can trade with another country and may have to pay local taxes for the trades but you don't pay corp tax if you don't have a business there.

      1. frank 3

        and they past huge amounts of tax in Bermuda...

        And the fortunes of the richest 100 people in the world increased by $2.4bn EACH last year.

        But of course, they paid their fair share in tax, right?

        Oh dear, seems not. No-one actually knows how much money is held permanently offshore in tax havens, but I've seen estimates ranging from about 10 Trillion to about 32 Trillion.

        http://www.oxfam.org/sites/www.oxfam.org/files/cost-of-inequality-oxfam-mb180113.pdf

    3. Anonymous Dutch Coward
      Pint

      Good point.

      Stuff like that is exactly what keeps bureaucrats, tax law specialists, economists, diplomats etc in cushy jobs, committees figuring it out, trying to set up treaties etc.

      Beer because I need it only thinking about this.

  2. Anonymous Coward
    Anonymous Coward

    Simpler option

    A simpler option when faced with tax avoidance in the complex world of accountancy rules would be to replace corporation tax with a tax on turnover, maybe just for turnover above £1M or equivalent. If you assume that a typical business should make around 10% profit, then tax at 2% turnover instead of 20% on profit, etc.

    OK, it is kind of unfair that high-profit entities pay less on the earnings, and those below 1% profit are going to be heading for bankruptcy (though to be fair if you can't make 1% profit then it looks grim anyway).

    1. Chris Miller

      Re: Simpler option

      Many successful retailers make ~1% profit on turnover - John Lewis for example. In reality, it would just be added to the sale price - we could call it VAT for simplicity.

      1. Anonymous Coward
        Anonymous Coward

        @Chris Miller

        My apologies, I had not realised the margins were that thin even for a successful retailer.

    2. Anonymous Coward
      FAIL

      Re: Simpler option...

      ...but a stupid one.

      Take you are aware very few businesses make any profit for the first few years (maybe as long as 5 years), of course you are, because you've done some research on the subject before posting?

      So whack on a turnover tax and 99% of those would die in the within first year.

      1. Anonymous Coward
        Anonymous Coward

        Re: Simpler option...

        "Take you are aware very few businesses make any profit for the first few years (maybe as long as 5 years), of course you are, because you've done some research on the subject before posting?

        So whack on a turnover tax and 99% of those would die in the within first year"

        In those 5 years the company isn't living off air, it's burning money. Put a small tax on the relatively small turnover they'll have at the start and they'll just burn money slightly faster. If that puts you out of business, then tough shit. I'm not paying my taxes to give your business ideas a free ride.

    3. HollyHopDrive

      Re: Simpler option

      I think the rule would need to be slightly more sophisticated. But in principle.....

      How about where the company is UK based only (no parent companies) they can pay corp tax as they do now. (Probably need a turnover limit too)

      Where they are international no more than x% of foreign costs (defined by business type) can be tax deductible. (For example coffee may be 20% but steel 60%). Any non physical goods 0% and the product has to physically pass into the country so server hosting is out!

      Tax should be paid when the payment is issued from for the product or service. For example if marks and Spencer advertise uk products on you tube and pay Google 1m from their London office then that is taxable here from Google . If they pay from France then it's taxable in France. However, if m&s decide to do that then m&s UK then can't claim tax relief on the £1 they would have been cross charged from the France part of the business. Either way collect 200k of tax.

      Probably a flaw and may be difficult to legislate but something along those lines must be do able

    4. M7S

      Re: Simpler option

      Alas no. I work part time for a specialist finance company, and dare I say it in terms of capitalism, one of the good guys.

      We obtain funding from banks at a margin over Libor and finance international trade at a few basis points over that. Our turnover is hundreds of millions per annum, our profit is the difference between the two rates, less our expenses (staff, offices, IT kit and no, we don't pay telephone number salaries or bonuses) and amounts to a couple of million a year. Its a profitable business within reason but the simplistic approach would end us at a stroke, or mean that we'd have to be passing on much higher costs to our customers, who in turn would have to do the same to theirs.

      I suspect that many other operations in other sectors (small retailers, farmers etc) would have similar issues. That said, you're quite correct in that the entire tax system needs simplification.

    5. Anonymous Coward
      Anonymous Coward

      Re: Simpler option

      So what happens if you make a loss in one year? Still got to pay your tithe to the massa in de ole plantation?

      Honestly, these threads on tax, do you all come over from the Guardian website?

      1. Anonymous Coward
        Anonymous Coward

        @Flatpackhamster

        I think you will find you still have to pay your employer's NI contribution, and your rates and VAT, etc, even if you don't make a profit.

        Taxation is all about taking your money for the common good.

        The main arguments are about what the "common good" should be (often politically driven), and just how do you distribute that cost fairly. What we now see are Byzantine tax laws that allow the biggest of company to legally avoid paying a fair share, while smaller companies and individuals end up paying more to make up for that.

        There may be no simple option, but something simpler and fairer HAS to be possible.

  3. ratfox
    Devil

    Honest laws

    I think that governments in general should state honestly what is the purpose of the laws. Creating a tax on data, and justifying it by saying the users are workers collecting valuable information for the company sounds more like insane troll logic than anything else. They might as well come out and say honestly, we are taxing you people because we need the money and you can afford it.

    The French government seems adept at these disingenuous justifications. E.g: The law which forbids people from covering their face in public is claimed to be a matter of security, and not at all a way to push Muslim integration by stopping the practice of wearing a veil. Never mind that the same law prescribes especially harsh punishment for a person who forces other people to cover their face, like a Muslim husband might do to his wives and daughters. Relation to security: None.

    1. Anonymous Coward
      Anonymous Coward

      Re: Honest laws

      Turkey also forbids the veil, even though the population is mostly moslem.

      1. ratfox

        Re: Honest laws

        Yes, but they say directly why they forbid it, i.e. because they want a secular and modern country. They don't make bullshit claims about it being a matter of security.

        1. DrXym

          Re: Honest laws

          "Yes, but they say directly why they forbid it, i.e. because they want a secular and modern country. They don't make bullshit claims about it being a matter of security."

          France has been secular for over 100 years now and has laws to that effect. In fact their first tussles were predominantly with Roman Catholics because the state seized all their churches and the religion only supervises their use now. Muslims may feel aggrieved and perhaps security was one excuse / reason but it's really nothing new in that country.

    2. MrXavia
      Holmes

      Re: Honest laws

      I've always found it interesting that a mulsim woman can wonder around an airport with their whole body covered, head to toe, yet if I walked in there in motorcycle leathers & helmet, I would likely be approached by armed security and if I was lucky politely asked to remove my helmet...

      Maybe its my age, but I was always taught that you should remove hats when inside, and I would not allow anyone inside my house who had a face covering, or even open the door...

  4. Tringle

    I'm terrible sorry for the inconvenience

    But here in La Belle we have a government of unreconstructed 1950s socialists and communist. They are, to a man (and woman, and especially the greens) away with the fairies, but alas they did a good job convincing the electorate that they were nice cuddly socialists à la Tony Blair (bad enough I hear you shriek, but they had to get rid of the nymphomaniac midget).

    So I am afraid with have got another 3 years or so of this kind of idiocy before normal service is resumed. Whatever that is.

    1. Anonymous Coward
      Anonymous Coward

      Re: I'm terrible sorry for the inconvenience

      In France, socialist idiocy is normal service (I live there). The midget was a brief period of sanity. Arrogant, nacissistic, Napoleonic sanity, true, but sanity nonetheless.

    2. frank ly

      Re: I'm terrible sorry for the inconvenience - Just wondering ...

      " ...nymphomaniac midget."

      Where can I find pictures of her on the internet?

    3. Anonymous Coward
      Anonymous Coward

      Re: I'm terrible sorry for the inconvenience

      So I am afraid with have got another 3 years or so of this kind of idiocy before normal service is resumed. Whatever that is.

      Is there a reason why you cant move to a country with politics more in keeping with your own?

  5. JDX Gold badge

    The report argues that tax hasn't caught up with the digital economy

    This is the one part I can agree with.

  6. g e
    Pint

    Fantastic!

    Can I at once urge all our French cousins to upload *shitloads* of pics to facebook. Thousands, please.

    In other news, short Failbook stock now

    Biere pour tout, parce-que je n'ai plus du vin :o(

    1. Chris Miller
      Headmaster

      Re: Fantastic!

      je n'ai plus de vin, SVP.

      Tu es Miles Kington et je claim mon €5.

      1. g e
        Happy

        Re: Fantastic!

        Super! Maintenant je ne dois pas penser pour une autre microsecond si on dit 'du' ou 'de'!

        Merci, mon professeur!

        "After expressions of quantity, the partitive is usually reduced to DE which is invariable:"

        1. Chris Miller
          Happy

          De rien.

  7. Silverburn
    Coat

    Google and Facebook have not yet responded to our request for comment on the report

    ..they were too busy laughing at the lunacy of it all...?

  8. Valeyard
    Pirate

    economy plan

    France's new plan is a perl script which uploads 2000 jpgs of random images per minute to random sock puppet facebook accounts

    watch the tax come rolling in!

    1. billse10
      Pirate

      Re: economy plan

      don't forget that Perl script, as used in a commercial context, would have to be in French.

      If Facebook / Google got any sense, they'll simply open a specific subsidiary for handling French customers. Then put a line item in it's accounts of 99% turnover for complying with silly language laws (Toubon etc), and make sure the French subsidiary actually makes a loss. Oh, and make sure it has no employees or physical assets.

      Or just charge French subscribers, and wait for French politicians to scream about EU single market etc - even though France itself is one of the biggest obstacles to the proper implementation of that single market.

  9. Tim Worstal

    I've talked to one of these Colins

    I wrote about this tax elsewhere. And ended up being emailed by a rather pissed off Frog.

    The gist of his argument was actually this:

    We can't tax these bastards any other way (EU rules, Single Market, OECD Double Taxation treaties and all the rest) so we'll make something up and see if it flies.

    That really is it. The taxing data thing is purely and simply because the law doesn't currently prevent them from doing so.

    1. billse10
      Megaphone

      Re: I've talked to one of these Colins

      read your other article, and am not surprised you got that sort of response - not because of article itself, that simply points out the folly of the scam. Sorry, scheme.

      If your correspondent were more honest she/he would've said "we have very few home-grown global Internet champions, because our legislation about languages, working hours and so on could not have be better designed to prevent startups that have even a dream of going global, so let's just try to tax everyone else's - sod EU law about cross-border trade, the only bits of EU law that apply to us are the ones we want. Now the cherry-picking of EU law is wrong, the British must not be allowed to suggest it, we don't do that.

      We just choose which bits we want to enforce and which bits we want to ignore, completely different thing."

  10. Number6

    Merde?

    Yes, I checked the date and it isn't April 1st. Nice idea, but it's not going to fly. Either FaceBook will refuse connections from French IP addresses or they'll start charging French users for access to offset the tax, or the French Ts and Cs will make the users liable to foot the tax bill on behalf of FaceBook.

    Or they'll just ignore it, in which case we need to introduce their management to that quaint English gesture that was supposed to have originated from battles against the French, namely the two-fingered salute.

  11. Longrod_von_Hugendong
    Mushroom

    Mind you...

    If the companies threaten not to pay, the french will surrender anyway, so problem solved.

  12. Ponmyword
    Paris Hilton

    French socialists ...

    even crazier than British ones.

    "If you drive a car, I'll tax the street,

    If you try to sit, I'll tax your seat.

    If you get too cold I'll tax the heat,

    If you take a walk, I'll tax your feet.

    Don't ask me what I want it for

    If you don't want to pay some more

    'Cause I'm the taxman, yeah, I'm the taxman"

    George Harrison et al.

    Paris because ...

  13. The Mole

    Workers...

    So if anybody who uploads pictures in France is considered a worker then presumably this means they are a worker and it would be illegal under the working time directive for them to be on facebook more than 35 hours a week. Under minimum wage laws presumably Facebook would also have to pay their users/'workers' €9.40 each hour they spend uploading their 'product'...

    1. Destroy All Monsters Silver badge
      Big Brother

      Re: Workers...

      You could consider that they are working off the watchful eye of the Great Taxator and so should be hammered for their impudence.

      I heard that the tax authorities went to amazon.fr for some protection money. Amazon told them to piss off because their revenues were basically transferred to the "mother company" in Luxembourg (a medium-sized office, I reckon), so the french tax authority couldn't put a bypass on the money flow. French tax authorities then went digging for data protection violations in the amazon.fr datastore, because, had they discovered them, the french CNIL would become involved and there is a law that in that case, the tax authorities get to have full control of the revenues. Don't know what became of that.

  14. J.G.Harston Silver badge

    Wasn't it Faraday who told a politician about electricity: I can't tell you what use it will be but I predict you will want to tax it.

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